CORRECTED-Qatari Islamic banks grow despite regional rift -IFSB data

Aug 29 (Reuters) - Assets and revenues at Qatar’s Islamic banks have grown over the past year but an increase in problem loans and a drop in foreign currency lending underscore the impact of a diplomatic rift in the region.

Qatar has been under a diplomatic and commercial boycott since June last year, when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with the world’s top exporter of liquefied natural gas.

The tiny state’s four full-fledged Islamic banks have not been immune, although their focus on Qatar’s domestic market may have helped them to some extent, according to data from the Islamic Financial Services Board.

Qatar Islamic Bank, Masraf Al Rayan, Qatar International Islamic Bank and Barwa Bank IPO-BABK.QA held a combined 358.6 billion riyals ($96 billion) in assets in the first quarter of this year, an 8.8 percent increase from a year earlier.

Most of that increase was due to their holdings of Islamic bonds, which stood at 65.1 billion riyals in the first quarter, a 37.7 percent rise from a year ago.

The Malaysia-based IFSB, which sets the standards for Islamic finance, started publishing data on Qatar in May as part of its quarterly reporting on the industry.

The banks reported a combined 3.9 billion riyals in revenues in the first quarter, an 18.6 percent increase. But non-performing finance expanded to 2.9 billion riyals from 1.7 billion riyals a year ago.